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Importance of Diversification when Considering Risk

Why is diversification so important when considering risk? What does it mean to diversify a portfolio?
How can you explain what beta means and how can you use it?

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Stock contains two types of risks, unsystematic risk (risks that are associated with this particular company or industry) and systematic risk (with is associated with the market). Systematic risk cannot be reduced because it is related to the market (and every stock in the market is affected), whereas unsystematic risk can be reduce by ...

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